2006-07-31 04:00:00 PDT Atlacomulco, Mexico -- Tending his sun-drenched half-acre cornfield, Jose Davila represents a part of Mexico that may fade away as the pressures of free trade intensify.

"I'm an antique," said the hunched 90-year-old farmer. "Who wants to work all day in the sun and earn so little? All the younger people now look for jobs in factories or construction. Either that, or they go to the United States."

The growing dilemma that Mexico's 2 million corn farmers face as the tariffs that protect them shrink under the North American Free Trade Agreement was an issue in this month's presidential election. And as the United States wrestles with already high levels of illegal immigration, some experts say the demise of Mexico's peasantry deserves serious U.S. attention.

"The Bush administration has sought to control immigration at the border, but that's virtually impossible," said Harley Shaiken, director of UC Berkeley's Center for Latin American Studies. "The beginnings of immigration are in the displacement of farmers in Mexico."

An estimated 1.5 million agricultural jobs have been lost since NAFTA went into effect in 1994.

Tariffs protecting beans and corn, including the white corn Mexicans use for tortillas, which make up a third of their diet, are to end in January 2008. That is exposing Mexican corn farmers -- two-thirds of whom subsist on 12 acres or fewer and 90 percent of whom lack irrigation -- to competition with U.S. farmers who are so highly mechanized they can produce a metric ton of corn with a half-hour's labor, according to the U.S. Department of Agriculture.

American corn exports to Mexico -- now one-fifth of the corn consumed there -- have more than tripled in NAFTA's first 10 years, and the USDA predicts they will double again in the coming decade.

"Prices have fallen ever since NAFTA," said Davila's son, Casto, 67, who helps his father tend the cornfield, which depends on central Mexico's May-September rainy season. Some of the corn they grow feeds their livestock, while they sell some and use some themselves.

After buying fertilizer, renting a tractor to plow crops and laboring in the fields, the Davilas barely break even with corn prices at a rock-bottom 2.5 pesos, or 25 cents, per kilogram (2.2 pounds).

"Farmers here have long felt abandoned," said Casto Davila, who earns the bulk of his income from his small housing construction company. "The signal from the government is that we're better off selling our land."

The Mexican government has helped ease the transition to free trade with cash subsidies to farmers, but those, too, are to be phased out in 2008.

World Bank economist Daniel Lederman predicted, however, that Mexico's next president will face pressure to continue aiding agriculture, which employs 20 percent of the population. And he said 2008 is unlikely to bring a dramatic economic shock.

"In practice, you've had free trade already," said Lederman. "I'm not sure that 2008 is when the sky falls."

During Mexico's recent presidential campaign, the two leading candidates, left-leaning Andres Manuel Lopez Obrador and conservative Felipe Calderon, disagreed on how to provide relief to the country's struggling corn farmers. Lopez Obrador insisted he would not honor the 2008 deadline, which he said threatened to put corn farmers out of business, and he vowed to increase subsidies and offer growers low-interest loans.

Calderon, the election's apparent victor, who comes from the ruling National Action Party, called Lopez Obrador's policies paternalistic and unsustainable. Like President Vicente Fox, Calderon believes Mexico must modernize and diversify its agricultural sector in part by instructing farmers to grow more profitable crops such as organic vegetables and herbs.

"We need to consider alternatives that will make life in the countryside more competitive," said Ernesto Cordero, Calderon's economic adviser.

"We cannot keep hanging on to programs that depend on subsidies and more subsidies," Cordero said. "Why not test other crops and, at the same time, build up infrastructure in agriculture areas so that producers can transport their products more easily?"

Yet cultural resistance and distrust of government may keep some farmers from signing on to a new way of work.

"They say we should grow broccoli and asparagus, but where's the training program?" said Casto Davila. "Do they expect us to take on new methods, invest in new tools, and then suddenly find a new market for our goods?"

Modernizing peasant agriculture is important, but the effect will be modest at best, said UC Berkeley's Shaiken.

"There's no way peasant farmers in Oaxaca are going to be competitive with highly subsidized, very productive farms in Iowa," he said.

Cordero said he and others on Calderon's economic team would meet with agriculture leaders in coming months to define how such training programs should work. Meanwhile, Calderon has pledged to extend government programs that modestly subsidize small farmers. He also backs expanding efforts to produce ethanol from corn.

Calderon has indicated he won't spend precious political capital pushing the Bush administration to reopen NAFTA.

"It's more useful for us to spend our energy on ways to strengthen Mexico's manufacturing sector and build up our infrastructure than to push for changes on the agricultural front," said Cordero.

Free-trade advocates say the squeeze that Mexico's peasant farmers are feeling is an unfortunate but necessary byproduct of entering the global economy.

"Trade gains are broad, and trade pains are very specific," said Tim Kane, director of international economics at the Heritage Foundation in Washington, D.C. "A few people feel the pain, lose jobs, get displaced. That's what Mexico is experiencing. That's the path to progress."

The pain actually could be an incentive for farmers like the Davilas to adapt or move on, he said.

NAFTA has stimulated growth in factory jobs, especially in border-based assembly plants, said the World Bank's Lederman, and that has helped absorb displaced farmers and deter migration to the United States.

But manufacturing growth has not kept pace with the need for new jobs created by a growing population and a shrinking farm sector, said Sandra Polaski, director of the Trade, Equity and Development Project at the Carnegie Endowment for International Peace.

"At the end of the day, most of the migration comes from the countryside," she said, adding that the additional downward pressure on corn prices in 2008 "will be a reason (farmers) send labor outside the household, whether to Mexican cities or across the border."

Polaski suggested that the United States borrow a page from the European Union's integration handbook and make major investments in Mexico's economic and educational infrastructure as the richer European countries did to prevent massive migration of workers from poorer countries like Portugal and Greece.

"The United States must care," Shaiken said, "because the United States must face the consequences."